Impact of Sequestration on Commercial Airlines and Business Aviation

1. Impact of Sequestration on Commercial Airlines and Business Aviation Dr. Tulinda Larsen Vice President tulinda@masflight.com Mobile. +1 (443) 510-3566 Courtney Jones Hrycay Vice President, Business Development courtney@masflight.com Tel: +1 617-283-9668 4833 Rugby Avenue, Suite 301 Bethesda, Maryland 20814 www.masflight.com March 28, 2013

2. EXECUTIVE SUMMARY Executive Summary • This study analyzes three impacts on commercial and business aviation • FAA announced closure of 149 airport towers • 55 airports with scheduled service • 1,500 scheduled weekly flights (passenger and cargo) • 10,600 weekly flights • 6,500 Part 91/125 weekly flights • 4,100 Part 135/121 weekly flights • CBP proposed reduction of nighttime services to minimize overtime • 27 U.S. airports have international arrivals between 10pm and 6am • 9,800 international flights into U.S. airports arrived at night in 1Q2013 • 1.8 million seats @ 80% LF ~ 1.5 million passengers affected quarterly • TSA potential reductions between 10pm-6am • 26,000 Passenger flights (based on January 2013) • 12,000 Cargo flights • 6,000 Business/General Aviation flights

3. DEFINITIONS What is Sequestration? • Mandatory across-the-board federal spending cuts • Called for in 2011 congressional legislation if other deficit-reduction measures not enacted • Initial round of automatic budget cuts to federal agencies has begun • 8% reduction in 2013 • Sequestration will cut defense and non-defense programs by $1 trillion over nine years • Unless Congress changes the law passed in 2011, the budget cuts will have a lasting impact over 9 years

4. AVIATION Sequestration Impacts on Aviation Federal Aviation Administration Department of Homeland Security • Many programs not subject to cuts • Airport Improvement Program • Facilities and Equipment • Research • Closing 149 control towers • Other staff reductions expected • Customs & Border Patrol proposes reducing overtime by limiting overnight services • TSA hiring freeze • Up to an additional 1,000 vacancies by Memorial Day Weekend • Up to 2,600 vacancies by the end of the fiscal year

5. TOWER CLOSINGS FAA Announced 149 Tower Closures • 55 with scheduled passenger airline service • 14 EAS • 10,600 weekly flights on a filed flight plan (excludes VFR and local traffic) • 6,500 Part 91/125 weekly flights • 4,100 Part 135/121 weekly flights FAA Tower Closings Dots indicate tower closures; Red dots are airports with scheduled service Source: OAG Schedules; masFlight analysis; gcmap.com Note: Based on scheduled service March 1 – 7, 2013; scheduled service includes scheduled charter flights, cargo flights, and passenger flights

6. TOWER CLOSINGS The 55 Airports are Served by 15 Airlines Source: OAG Schedules; masFlight analysis Note: Based on schedules for March 1 – March 7, 2013 Other airlines include Aeromexico, Alaska Airlines, Cape Air, Allegiant Air, Great Lakes Airlines, Frontier Airlines, Spirit Airlines, ExecAir

7. TOWER CLOSINGS Many of the affected airports could have 10+ impacted flights per hour at peak times Source: ASDI radar data – Part 91/151 flying and Part 135/121 flying – March 1-7, 2013; masFlight analysis Note: Average “daily“ operations based on 5-day week

8. TOWER CLOSINGS Impact of Tower Closures • What does it mean for a tower to close? • A tower closure does not mean the airport will be closed. • Rather, pilots will face arrival and departure delays, particularly during bad weather conditions, as regional air traffic control facilities (located away from the airport) sequence and meter arrivals and departure clearances to maintain aircraft separation. • masFlight expects that the impact on delays and congestion will be substantial, as some of the impacted airports have as many as 10 flights per hour during peak times.

9. CUSTOM & BORDER PATROL CBP Proposed Overtime Reduction Will Impact Overnight Passenger Flights • 27 US airports have overnight international passenger flight arrivals Airports with Scheduled Overnight International Passenger Flight Arrivals Source: OAG Schedules; masFlight analysis Note: Based on schedules for January 1 – March 31, 2013; overnight defined as 10pm-6am; excludes flights arriving from international airports with pre-clearance facilities

10. CUSTOM & BORDER PATROL International Arriving Flights Potentially Will Impact 1.5M Passengers / Quarter 9,800 flights with 1.8M seats @ 80% LF = 1.5M passengers impacted Source: OAG Schedules; masFlight analysis Note: Based on schedules for January 1 – March 31, 2013; excludes flights arriving from airports with pre-clearance facilities

11. CUSTOM & BORDER PATROL JFK, Miami, Guam and Newark Will Face the Greatest Impact of CBP Cutbacks Source: OAG Schedules; masFlight analysis Note: Based on schedules for January 1 – March 31, 2013; excludes flights arriving from airports with pre-clearance facilities

12. TSA TSA Cutbacks Would Impact Late Night and Early Morning Flights Source: OAG Schedules; masFlight analysis Note: Based on schedules for January 2013

13. TSA Nearly 18,000 Cargo and Business Aviation Flights Operate Overnight Source: FAA; masFlight analysis Note: Based on FAA data for January 1 – January 31, 2013

14. CONCLUSIONS Conclusions • masFlight concludes that sequestration impacts commercial and business aviation on three levels: • 149 tower closures will lead to arrival and departure delays • Significant customs wait times and for more than 1.5 million passengers (quarterly) held on aircraft or flights rescheduled until customs agents begin their scheduled morning shifts. • Each month, over 26,000 passenger flights and 18,000 cargo / business aviation flights depart U.S. airports between 10pm to 6am, thus reduced TSA overnight staffing could have a widespread impact on late-night and early morning departures across the country.

15. WHAT WE DO What is masFlight? Global aviation operations data platform • Reliablegate-to-gate flight records • Global data footprint • Real-time (within 30 min) and historical(from 2009) analysis • Multisource linked data: schedules, gates, delay/cancellation, and weather • Designed for operations, planning and research across airports, airlines and alliances • Searchable, usable information viaweb app, database connection, or customized solution

16. OUR PLATFORM Our Platform Multisource, integrated airline operations data Our platform shows where, when and why problems occur • Benchmark competitorsand alliance partners • Examine diversions, cancellations, delays and determine root causes • Deep-dive into airport gates, taxi times, and runway patterns • Analyze air space usage and air traffic management Planned Flight Schedules AirportRunway Data Airport Gate & Terminal Data Airline Ops Data Multisource Flight Status U.S. Radar Data Airline Fleet Information Global Weather Data and Maps Key Partners and Suppliers:

17. TEAM OVERVIEW masFlight Team Deep experience in aviation analytics and software development Joshua Marks CEO Experience in software startups (Virtualis, VelociGen, Fonality) and airlines (MAXjet, American, Delta, Allegiant and Spirit). MBA and BA from Harvard. Licensed pilot. Tulinda Larsen VP Sales and Marketing 30 years experience developing, selling and marketing aviation data and software solutions. Managing director of airline ops consulting group. Doctorate, UMUC. MA and BA from George Washington. Licensed pilot. Pete West VP Government and Public Affairs Experienced government and public affairs executive for Delta Air Lines, National Business Aviation Association and the Next Generation Air Transportation System (NextGen) / Joint Planning Development Office.  BA political science from Davidson College. Courtney Jones Hrycay VP Business Development Operations research expert with airline management experience. Operations analysis at JetBlue and Southwest. Aviation, aerospace & defense consultant at Oliver Wyman. MBA from MIT Sloan, BSE from Princeton University. Rodrigo Navarro Chief Technology Officer Systems engineer and cloud data expert with 20 years experience in IT development and ops management. Managed global operations, Sybase. PMM from Stanford GSB, MBA and BS from Universidad del Norte. Edmund Otubuah Director of Aviation Products Operations research and planning at JetBlue, including data collection, analytics and management reporting. Additional experience in marketing metrics and measurements. BS from Embry Riddle. Licensed pilot.